In this breach of contract action, plaintiffs Foley, Incorporated and Foley Rents (together, Foley) move, pursuant to CPLR 3212, for an order granting summary judgment in their favor and, pursuant to CPLR 3211, for an order dismissing the answer (Answer) and counterclaims asserted by co-defendants, The Helix Group, Inc. (Helix) and William Lozito (Mr. Lozito) (together, the Defendants).

Foley and Helix entered into a commercial credit application and equipment rental agreement (Agreement), whereby Helix agreed to rent certain equipment (collectively, the Equipment) from Foley, and Foley agreed to supply the Equipment to Helix on a daily/weekly/four-week basis. Helix, pursuant to the Agreement, waived all warranties. The pieces of Equipment included a Caterpillar Hydraulic Excavator (Excavator) and a Hammer Point Wear Bit (Hammer Bit). Mr. Lozito, a principal of Helix, contemporaneously executed a personal guaranty of payment (Personal Guaranty) under the terms of the Agreement.

The Equipment was delivered to, and remained at, Helix's specified work site. Despite the written notice provision set [*2]forth in the Agreement, Helix and Foley appear to have adopted a verbal notice practice. Helix made a number of phone calls to Foley complaining about the malfunctioning and inoperable condition of the Equipment. Foley dispatched a field mechanic to the Helix work site but he apparently was unable to repair the Equipment. Foley then replaced the Equipment (Replacement Equipment). Helix telephonically complained to Foley about the Replacement Equipment, and the excavation "down time" resulting from the malfunctioning/inoperative condition of the Equipment and Replacement Equipment at the work site.

Shortly thereafter, Helix and Foley stopped doing business together and Foley retrieved the Replacement Equipment. Helix then rented similar equipment from another supplier. Despite due demand for payment as set forth in the Agreement, Foley alleges that an outstanding balance remains due and owing for the Equipment/Replacement Equipment rental, delivery, retrieval, protection coverage, and repair. These fees were memorialized on a number of Foley invoices.

Foley commenced this action against the Defendants seeking to recover the previously demanded sums, as well as accrued interest on those sums, and legal fees accrued by Foley in seeking payment from the Defendants. Foley's complaint asserts several causes of action alleging breach of the Agreement and Personal Guaranty. Specifically, the asserted causes of action are: first and second, breach of contract for nonpayment of rent for the Excavator from July 24, 2008 through August 20, 2008, and from August 21, 2008 through September 17, 2008; third, breach of contract for nonpayment of rent for the Hammer Bit from July 24, 2008 through September 9, 2008; fourth, breach of contract for nonpayment of the 2% per month delinquency service fee; fifth, breach of contract for nonpayment of the costs of delivering, retrieving and refueling the Excavator; sixth, breach of contract for nonpayment of the costs of delivering and retrieving the Hammer Bit; seventh, breach of contract for nonpayment of the cost of repairing the Hammer Bit; eighth, breach of guaranty by Mr. Lozito for nonpayment of Helix's defaulted upon payments; and ninth, breach of contract for nonpayment of attorneys' fees incurred by Foley in connection with its efforts to recover payment from Helix.

In response, the Answer consists of general denials, affirmative defenses (Defenses) and counterclaims. Defendants argue that the Equipment, as well as the Replacement Equipment, was inoperative and malfunctioned from the outset of the rental.

Foley presently seeks summary judgment in its favor and dismissal of the Defendants' Answer and counterclaims. The court however agrees with Defendants that the pre-discovery motion is legally insufficient because there exist material, triable issues of fact. To grant summary judgment, it must clearly appear that [*3]there are no material issues of fact. Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 (1957).

Defendants' primary defense in this action is that the Foley failed to deliver operable equipment under the Agreement and therefore the Defendants' payment obligations under the Agreement should be excused or reduced. Foley counters that the Defendants cannot maintain such a defense because of the the disclaimer of warranty contained in the Agreement and related invoices. Defendants further argue that the court should find that any disclaimer is invalid under the UCC.

As stated by the Court,

The Uniform Commercial Code plainly recognizes the validity of disclaimers of warranties in sales agreements under certain circumstances (Uniform Commercial Code, § 2-316). Here, pursuant to the statute, the exclusion of warranties was accomplished by conspicuous and bold print and thus complied with the statute in that respect. The question whether in this case the disclaimer is unconscionable remains.

Section 2-302 of the Uniform Commercial Code provides that the court may refuse to enforce a contract clause once it finds the clause to have been unconscionable at the time it was made. The determination of unconscionability is a matter of law for the court to decide (Zicari v Harris Co., 33 AD2d 17, 24), and thus subject to our review. The Official Comment to section 2-302 states that it "is intended to allow the court to pass directly on the unconscionability of the contract or particular clause therein and to make a conclusion of law as to its unconscionability", and that "[t]he basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract." (McKinney's Cons Law of NY, Book 62 1/2, Part 1, p 193.) The term "unconscionable" is thus flexible, to be applied within the framework of the transaction under scrutiny, and considered in the light of the commercial climate then existing and the common law.

Viewing the facts currently in record in the light most favorable to Defendants on this pre-discovery summary application, the court finds that there are issues of fact as to whether the disclaimer of warranty relied upon by Foley is [*4]enforceable. The statute states "[w]hen it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination." UCC § 2-302 . The Official Comments emphasize that "[t]his section is intended to allow the court to pass directly on the unconscionability of the contract or particular clause therein and to make a conclusion of law as to its unconscionability" and that "[t]he present section is addressed to the court, and the decision is to be made by it. The commercial evidence referred to in subsection (2) is for the court's consideration, not the jury's."

Therefore, on this motion the Foley is required to present commercial evidence sufficient for the court to determine as a matter of law that the disclaimer of warranty is enforceable. See Master Lease Corp. v Manh. Limousine, Ltd., 177 AD2d 85, 90-91 (2d Dept 1992). While the face of the Agreement disclaims any warranty of merchantability or fitness for any purpose and describes the equipment as being received in good and operating condition, the "Terms and Conditions" of the Agreement provide in Paragraph 6 that the lessee has 24 hours to inspect the equipment to determine if it is in "full compliance with the terms of this rental/lease agreement." While the Agreement on the one hand disclaims warranty, the terms and conditions of the Agreement may be interpreted to imply a warranty based upon an inspection by the lessee. Furthermore, if Defendants' affidavit in opposition to the motion is credited, Foley's conduct in replacing and repairing the Equipment provides evidence that the disclaimer was not intended by the parties to be enforced in the manner argued by Foley.

Thus the validity of the warranty disclaimer is an issue of law that court cannot determine until the underlying factual issues are resolved and that cannot be done on the papers now before the court. See Zuckerman v City of New York, 49 NY2d 557 (1980). Accordingly, that portion of Foley's motion seeking CPLR 3212 summary judgment is denied.

That portion of Foley's motion seeking dismissal, pursuant to CPLR 3211, is denied as to the Defendants' first (failure to state a cause of action) and third defenses (failure to mitigate damages) and second counterclaim (breach of the Agreement for failure to provide operational Equipment/Replacement Equipment) because they are inextricably intertwined with the facts and causes of action asserted in the complaint. Furthermore, no motion by a plaintiff lies under CPLR 3211 (b) to strike the defense of failure to state a cause of action. Riland v Frederick S. Todman & Co., 56 AD2d 350 (1st Dept 1977). It amounts to an inappropriate endeavor by a plaintiff to test the [*5]sufficiency of his own claim, and needlessly expands the pleading stage of an action. Id. The assertion of the failure to state a cause of action in an answer as an affirmative defense is mere surplusage and should not be subject to a motion to strike or provide a basis to test the sufficiency of the complaint, since such a defense may be asserted at any time (CPLR 3211 [e]), even if not plead.

Nonetheless, dismissal is appropriate as to the Defendants' Second, Fourth and Fifth^[FN1] Defenses, as well as the Defendants' First, Third, Fourth, Fifth, Sixth and Seventh Counterclaims.

As to the Defendants' Second Defense ([in essence, a grab bag/catch all of objections] the equitable doctrines of laches, waiver, release, estoppel and "other doctrines of law"), such doctrines are equitable in nature and not applicable, as here, to actions in law. Moreover, the doctrine of laches is not available as a defense where the action at law has been commenced within the period set forth by the statute of limitations. The Defendants have withdrawn their statute of limitations Defense and the defense of laches against plaintiff's action at law is unavailable. Appleton v National Park Bank of New York, 211 AD 708, 711 (1st Dept 1925), aff'd 241 NY 561 (1925). As to waiver, the Defendants have failed to set forth any voluntary, intentional relinquishment of Foley's rights/remedies. Likewise with respect to estoppel, the Defendants have failed to support such a claim, in that they have not set forth in what manner, and to what extent, the Defendants justifiably relied upon Foley's inconsistent conduct and were thereby prejudiced.

As to the Defendants' Fourth (untimely, pursuant to the statute of limitations) and Fifth (failure to join necessary parties) Defenses, judicial review has been rendered moot in that these Defenses have already been withdrawn by the Defendants (see, footnote 1).

The Defendants' First Counterclaim (contributory negligence) should be reserved as a defense in an action sounding in tort rather than, as here, in breach of contract where it does not lie.

As to the Defendants' Third Counterclaim (breach of fiduciary duty), lenders/creditors, such as Foley, owe no such duty to borrowers/debtors, such as the Defendants (Harris v Adejumo, 36 AD3d 855 [2nd Dept 2007]).

Regarding the Defendants' Fourth Counterclaim (breach of the contractually implicit duties of good faith and fair dealing), the Defendants have failed to set forth a basis upon which to support their mere conclusions of law that Foley sought to [*6]prevent performance by the Defendants, or to withhold its benefits from the Defendants (Collard v Incorporated Village of Flower Hill, 75AD2d 631 [2nd Dept 1980], affd 52 NY2d 594 [1981]).

The Defendants' Fifth Counterclaim (unjust enrichment) must be dismissed because no such equitable relief is available where, as here, there is a recognized and accepted relevant agreement.

As to the Defendants' Sixth (breach of the contractually implicit warranty of merchantability) and Seventh (breach of the contractually implicit warranty of fitness) Counterclaims, the court cannot determine these counterclaims until the validity of the warranty disclaimer is determined and therefore dismissal shall be denied as to these counterclaims.

Accordingly, it is hereby

ORDERED that summary judgment on the complaint is denied in all respects; and it is further

ORDERED that the Second Defense asserted by The Helix Group, Inc. and William Lozito is dismissed; and it is further

ORDERED that the Fourth and Fifth Defenses asserted by The Helix Group, Inc. and William Lozito are dismissed because such relief has been rendered moot in that these Defenses have been withdrawn (see Footnote 1); and it is further

ORDERED that the First, Third, Fourth, and Fifth Counterclaims asserted by The Helix Group, Inc. and William Lozito are dismissed; and it is further

ORDERED that all of the causes of action being asserted in the complaint, and all of the remaining Defenses and Counterclaims being asserted in the Answer are severed and remain in effect for further prosecution and defense, and it is further

ORDERED that the remaining parties shall appear at a preliminary conference on September 28, 2010, at 9:30 A.M, in IAS Part 59, Room 122, 80 Centre Street, New York, NY.

This is the decision and order of the court.